IS ENVIRONMENTAL, SOCIAL, and governance
(ESG) investing good for the
bottom lines of U.S. college and university
endowments? A report from the
Intentional Endowments Network (IEN)
looks at 11 higher education institutions
that are early adopters of ESG, fossil fuel
divestment, or other sustainable investment
strategies and finds that fiduciaries
are proceeding “without sacrificing financial
returns.” The IEN is a peer network
of colleges, universities, and institutional
investors committed to using investment
to create a sustainable economy.
The case studies in the report
“demonstrate that it is possible to take
a thoughtful approach to ESG factors,
have a meaningful impact in driving positive
change for institutions’ stakeholders
and communities, and maintain or
improve investment performance.”
One school reviewed in the
IEN report is California State
University in Long Beach.
According to Aaron J. Moore,
CFO of the California State
University Foundation, “an
ESG mandate best allowed us
to align our investments with the
university’s values without sacrificing
returns. Preliminary results show us up
75 basis points over the benchmark with
related fees cut nearly in half.”
The IEN report includes a meta-
analysis of research on ESG investing
performance, which shows that 90
percent of the studies find ESG investing
matched or exceeded traditional
performance benchmarks.
“For the first time, we have a collection
of real-world cases of college and
university endowments implementing
sustainable investing
strategies and meeting their financial
performance targets,”
says report co-author Georges
Dyer, co-founder and executive
director of IEN. He adds that the
report shows “endowments large
and small can invest for a low-carbon,
sustainable future, in ways that reduce
risk, enhance returns, and protect [the
institutions’] reputations.”
Download “Financial Performance of Sustainable Investing: The State of the Field and Case Studies for Endowments.”